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Starting a Business in Germany

Now that you are fully aware of the cultural aspects of doing business in Germany, you might also want to launch your own business here. Many an expat have arrived here, missed something from their home country and thought they had just the right idea for the German market. But be forewarned, starting a business is not as simple as importing an idea or product. Germany is a highly competitive and sophisticated marketplace. To be successful, you will not only need a good idea, but also a strong business plan, determination and a clear vision.

When launching a business here, you might also think that you will be confronted by a maze of German-style rules and regulations. Think again. The legal formalities have been streamlined, and the entire process can amazingly be completed in just a few days.

There are also a wide variety of programs to help you navigate your way through the process. The local Chamber of Commerce and Industry (IHK) offer courses, seminars and advisory services to help start-up companies. In some cases, theses programs are specifically targeted to foreigners. There is also a mind-numbing amount of subsidies and low interest loans for start-ups. The federal Economics Ministry offers two multilingual websites which provide a good overview: www.existenzgruender.de and www.german-business-portal.info.

But before you embark on your journey, it is important to consider a few fundamental questions about whether it is even necessary to establish a legal entity to conduct business. If you are a freelancer (i.e. translator, graphic designer, but also lawyer or accountant, etc.) then you only need to apply for a tax number at your local Financial Office (Finanzamt). In most cases you will not need to specifically establish a company to do this.

If you plan to run a small business (in which you or several people are owners), then you will need to register the business with the local Commercial Office (Gewerbeamt). If you are required to incorporate your company, there are several types of legal entities to choose from. By far, the most popular is a limited liability corporation (Gesellschaft mit beschränkter Haftung or GmbH), which as the name implies, limits your personal liability in the business. The minimum capital requirement for a GmbH is 25,000 euros, and there are numerous legal reporting requirements (such as a balance sheet with profits and loss statement). There are several other types of legal entities to choose from (include a Ltd based in the UK), so it is best to consult with a legal adviser.

If you plan to run a business that offers a skilled trade (such as hair dresser, plumber, etc.), then your business must be licensed to operate by that specific skilled trade register. Your qualifications will be carefully examined, and some of these professions remain highly regulated.

However, the federal government has now funded several programs to make it easier to foreigners to have their qualifications recognized, allowing them to work in regulated professions. Consult the website www.recognition-in-germany.de for more details. Another resource is the IHK Foreign Skills Approval (www.ihk-fosa.de) which is administered by the local chambers of commerce.

All of this is predicated, of course, on you possessing a valid visa to be legally self-employed in Germany. If you are a resident of an EU or EEA country, then you do not need a visa to enter and work in Germany. Citizens of Australia, Canada, Israel, Japan, New Zealand, South Korea, the United States and 22 other countries do not need a visa to enter Germany and stay for three months.

If you want to stay longer, you must apply for a residency permit (see separate article on this topic). If you are not from the EU/EEA and are seeking a residency permit for self-employment, then you must prove that your business will invest at least 500,000 euros and create at least five jobs.

The 2018 Newcomers Festival will be held on Sunday 9 Sept. from 1-6 pm at Frankfurt’s City Hall (Römer). This annual event attracts over 4,000 international visitors, up to 60 exhibitors (companies, clubs, organizations). It's a family-oriented event that welcomes the international community to the region. For more information about exhibiting or attending, check out the website www.newcomers-festival.de